Barito Pacific

(BRPT IJ)
Continuous improvement

Barito Pacific Tbk (BRPT IJ/Not Rated) was one of the stock markets top gainers in
2016, witnessing a roughly tenfold surge in share price during the course of the year
Basic Industry (see Figure 1). Underlying the exceptional share performance, in our view, was
outstanding net profit growth driven by subsidiary Chandra Asri Petrochemical Tbk
Company Report (TPIA IJ/Not Rated). Considering that TPIA contributed more than 95% of BRPTs
revenue as of 9M16, it is safe to assume BRPTs performance will continue to closely
January 11, 2017
track TPIAs. Notably, a number of improvement projects underway at TPIA appear to
still be on track.

Not Rated One of the top gainers in the basic industry sector in 2016
BRPT witnessed outstanding share performance during 2016, gaining 1,026.9%. The
Target Price (12M, IDR) N/A
stock opened at IDR130/share on January 4 th and closed at IDR1,465/share on
December 30th. In our view, this reflected the improved operational and financial
Share Price (1/10/17, IDR) 1,650
performance of its subsidiary TPIA. Thus, it is little wonder that TPIAs share price also
Expected Return N/A grew significantly during 2016 (see Figure 2).

BRPT: Diversified resource-based company

Established in 1979 under the name Bumi Raya Pura Mas Kalimantan, BRPT was
Consensus OP (16F, IDRbn) N/A previously known as an integrated timber company. However, unfavorable conditions in
the timber industry in the late 1990s led the company to downsize its timber-based
EPS Growth (16F, %) N/A
operations and diversify into other resource-based industries. After several name
P/E (16F, x) N/A
changes, the company became Barito Pacific Tbk in 2007. In the same year, the company
Industry P/E (16F, x) 16.5
acquired Chandra Asri, which later became known as Chandra Asri Petrochemical Tbk
Benchmark P/E (16F, x) 14.5
(TPIA) upon merging with Tri Polyta Indonesia Tbk. TPIA has now become the biggest
Market Cap (IDRbn) 11,516.8
revenue contributor to BRPT. As of 9M16, Magna Resources Corporation Pte. Ltd. is the
Shares Outstanding (mn) 6,979.9 majority shareholder of BRPT (see Figure 3).
Free Float (mn) 2,611.2
Institutional Ownership (%) 13.9 As of 9M16, BRPT booked USD1.4bn in revenue (+22.5% YoY). Cost of revenue and
Beta (Adjusted, 24M) 0.6 direct costs inched up by only 2.4% YoY, leading 9M16 gross profit to jump 200.9% YoY
52-Week Low (IDR) 127 to USD353.8mn. Bottom line soared, meanwhile; 9M16 net profit came to USD97.6mn,
52-Week High (IDR) 1,745 compared to USD1.8mn in 9M15.

(%) 1M 6M 12M BRPT is currently engaged in four business segments: petrochemical, wood
Absolute 11.9 240.9 1,140.6 manufacturing, property, and plantations (see Figures 5 and 6). The wood
Relative 11.8 234.1 1,123.8 manufacturing segment contributed a mere 0.4% to BRPTs 9M16 total external
revenue. Despite the lack of major activities in the wood-based segment, the company
(D-1yr=100) JCI BRPT
1,500 still maintains its forest concession rights (see Figure 7). The property segment made up
0.2% of 9M16 total external revenue. On a separate note, BRPTs property assets are
1,000
mostly managed by Griya Idola. The plantation segment, meanwhile, accounted for only
500
1.0% of 9M16 total external revenue.
0
11/16
10/16

12/16
7/16
1/16
2/16
3/16
4/16
5/16
6/16

8/16
9/16

FY (Dec.) 2011 2012 2013 2014 2015

Revenue (USDmn) 2,207.2 2,295.0 2,519.0 2,476.9 1,406.1
PT. Mirae Asset Sekuritas Indonesia
Gross profit (USDmn) 99.3 13.0 87.6 109.9 139.1
Operating profit (USDmn) 25.6 (66.3) 8.2 32.5 64.6
NP (USDmn) (15.3) (92.9) (25.9) (8.5) (5.4)
Mimi Halimin
EPS (IDR) (0.0) (0.0) (0.0) (0.0) (0.0)
+62-21-515-1140
BPS (IDR) 0.1 0.1 0.1 0.1 0.1
mimi.halimin@miraeasset.co.id
P/E (x) N/A N/A N/A N/A N/A
ROE (%) (2.1) (12.3) (3.6) (1.2) (0.8)
ROA (%) (0.8) (4.4) (1.2) (0.4) (0.2)
Note: NP refers to net profit attributable to controlling interests
Source: Bloomberg, Mirae Asset Sekuritas Research Indonesia Estimates

Analysts who prepared this report are registered as research analysts in Indonesia but not in any other jurisdiction, including the U.S.
PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
January 11, 2017 Barito Pacific

TPIA, the major revenue contributor to BRPT

More than 95% of BRPTs 9M16 revenue came from its petrochemical business segment,
managed by TPIA. As of 9M16, BRPT holds a majority stake in TPIA (more than c.60% including
the stake held by Magna Resources Pte Ltd, BRPTs parent entity) (see Figure 4). TPIA is
Indonesias largest integrated petrochemical company and the only national operator of the
Naphtha Cracker. TPIAs products are the basic ingredients of various consumer and industrial
products (more details can be found in our report on TPIA, TPIA: Outstanding improvement).
TPIA produces plastic raw materials and chemicals used for packaging products, autos, pipes,
electronics, etc. (see Figure 8). As the Indonesian economy is driven by domestic consumption, we
believe the packaging industry will continue to expand, creating growing demand for TPIA.

As of 9M16, TPIA managed to book USD1.4bn (+22.4% YoY) in revenue, primarily due to higher
sales volume on the back of capacity expansion. Gross margin improved markedly to 25.7%, from
only 10.5% in 9M15. As for the bottom line, TPIA achieved 9M16 net profit of USD216.7mn, an
almost sixfold increase over 9M15 net profit (USD31mn).

Improvement process still on track

At the end of 2015, TPIA completed a cracker expansion project, which significantly increased
production capacity. Specifically, ethylene production capacity increased from 600 KTPA to 860
KTPA (43.3%); propylene capacity increased from 320 KTPA to 470 KTPA (+46.9%); Py-Gas
capacity increased from 280 KTPA to 400 KTPA (+42.9%); and mixed C4 capacity increased from
220 KTPA to 315 KTPA (+43.2%).

Besides the cracker expansion project, TPIA is also expanding its business by establishing a joint
venture (JV) with Compagnie Financiere du Groupe Michelin (Michelin). The JV, to be named PT
Synthetic Rubber Indonesia, is to focus on manufacturing ingredients for environmentally friendly
tires and will use butadiene from TPIAs subsidiary.

We expect that TPIAs performance will continue to improve through all of its expansion projects.
Given that almost all of BRPTs revenue comes from TPIA, we expect TPIAs robust performance
to positively affect BRPT.

Mirae Asset Sekuritas Research Indonesia 2

KDB Daewoo Securities Research
January 11, 2017 Barito Pacific

Figure 1. BRPTs 2016 share price performance Figure 2. TPIAs 2016 share price performance

(IDR/share) (IDR/share)
1800 closed at IDR1,465/share 25000

1600 closed at IDR20,650/share

1400 20000

1200
15000
1000

800
10000
600

400 5000
200 started at IDR130/share
started at IDR3,445/share
0 0

Source: Bloomberg, Mirae Asset Sekuritas Research Indonesia Source: Bloomberg, Mirae Asset Sekuritas Research Indonesia

Figure 3. BRPTs ownership as of Sept 2016 Figure 4. TPIAs ownership as of Sept 2016

Magna Resources Corporation

Pte. Ltd.
4%
DBS Bank Ltd. S/A Trident 5% PT Barito Pacific Tbk
Trust Co (S) PT TE LTD MGSF
PT Barito Pacific Lumber
29.5% 15% SCG Chemicals Company
Limited
PT Tunggal Setia Pratama
45% Magna Resources
52.1% Prajogo Pangestu (Komisaris Corporation Pte Ltd
0.2%
1.6% Utama)
Marigold Resources Pte Ltd
3.5% PT Muktilestari Kencana
5.1%
7.9% Agus Salim Pangestu (Wakil Others
Direktur Utama) 31%
Lain-lain

Source: Company data, Mirae Asset Sekuritas Research Indonesia Source: Company data, Mirae Asset Sekuritas Research Indonesia

Figure 5. BRPTs group corporate structure Figure 6. BRPTs external revenue contributors

0.2%
0.4% 1.0%

Petrochemical
Wood manufacturing
Property
Plantations

98.5%

Source: Company data, Mirae Asset Sekuritas Research Indonesia Source: Company data, Mirae Asset Sekuritas Research Indonesia

Mirae Asset Sekuritas Research Indonesia 3

KDB Daewoo Securities Research
January 11, 2017 Barito Pacific

Figure 7. BRPTs forest concessions

Source: Company data, Mirae Asset Sekuritas Research Indonesia

Figure 8. TPIAs product portfolio

Source: Company data, Mirae Asset Sekuritas Research Indonesia

Mirae Asset Sekuritas Research Indonesia 4

KDB Daewoo Securities Research
January 11, 2017 Barito Pacific

APPENDIX 1

Important Disclosures & Disclaimers

Disclosures
As of the publication date, PT Daewoo Securities Indonesia, and/or its affiliates do not have any special interest with the subject company and do not own
1% or more of the subject company's shares outstanding.

Stock Ratings Industry Ratings

Buy Relative performance of 20% or greater Overweight Fundamentals are favorable or improving
Trading Buy Relative performance of 10% or greater, but with volatility Neutral Fundamentals are steady without any material changes
Hold Relative performance of -10% and 10% Underweight Fundamentals are unfavorable or worsening
Sell Relative performance of -10%
* Ratings and Target Price History (Share price (----), Target price (----), Not covered (), Buy (), Trading Buy (), Hold (), Sell ())
* Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months.
* Although it is not part of the official ratings at Daewoo Securities, we may call a trading opportunity in case there is a technical or short-term material
development.
* The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analysts estimat e of
future earnings.
The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic
conditions.

Analyst Certification
The research analysts who prepared this report (the Analysts) are registered with the Indonesian jurisdiction and are subje ct to Indonesian securities
regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws and regulations thereof. Opinions express ed in
this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily r esponsible for this report. Except
as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject compani es in the past 12 months and
have not been promised the same in connection with this report. No part of the compensation of the Analysts was, is, or will be directly or indirectly related
to the specific recommendations or views contained in this report but, like all employees of PT Daewoo Securities Indonesia, the Analysts receive
compensation that is impacted by overall firm profitability, which includes revenues from, among other business units, the institutional equiti es, investment
banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any
actual, material conflict of interest of the Analyst or PT Daewoo Securities Indonesia except as otherwise stated herein.

Disclaimers
This report is published by PT Daewoo Securities Indonesia (Daewoo), a broker-dealer registered in the Republic of Indonesia and a member of the
Indonesia Exchange. Information and opinions contained herein have been compiled from sources believed to be reliable and in good faith, but such
information has not been independently verified and Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness,
accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the Bahasa Indonesia. If this
report is an English translation of a report prepared in the Indonesian language, the original Indonesian language report may have been made available to
investors in advance of this report. Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising
from the use hereof. This report is for general information purposes only and it is not and should not be construed as an off er or a solicitation of an offer to
effect transactions in any securities or other financial instruments. The intended recipients of this report are sophisticated institutional investors who ha ve
substantial knowledge of the local business environment, its common practices, laws and accounting principles and no person w hose receipt or use of this
report would violate any laws and regulations or subject Daewoo and its affiliates to registration or licensing requirements in any jurisdiction should receive
or make any use hereof. Information and opinions contained herein are subject to change without notice and no part of this document may be copied or
reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Dae woo. Daewoo, its affiliates and
their directors, officers, employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale,
or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the op en market or otherwise, in each case
either as principals or agents. Daewoo and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to
provide investment banking, market-making or other financial services as are permitted under applicable laws and regulations. The price and value of the
investments referred to in this report and the income from them may go down as well as up, and investors may realize losses o n any investments. Past
performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur.

Mirae Asset Sekuritas Research Indonesia 5

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January 11, 2017 Barito Pacific

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